Arrowhead Pharmaceuticals Inc (ARWR)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	—	—	34.57	31.39	—	—	18.19	19.98	18.41	18.48	42.65	44.37	47.24	27.63	29.05	24.55	28.88	40.82	57.66	24.91
Days of sales outstanding (DSO)	days	—	—	1.85	94.66	51.89	2.12	0.35	1.82	0.38	27.07	2.28	3.91	41.15	3.51	64.03	3.33	3.00	1.43	5.46	51.68
Number of days of payables	days	15.64	131.05	27.07	30.19	2.30	8.02	15.86	31.99	14.41	40.07	58.83	35.42	32.26	44.38	28.89	107.57	128.93	94.12	65.06	57.56
Cash conversion cycle	days	-15.64	-131.05	9.34	95.85	49.59	-5.91	2.68	-10.19	4.38	5.48	-13.91	12.87	56.14	-13.25	64.19	-79.70	-97.05	-51.87	-1.95	19.04

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + — – 15.64
= -15.64

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. Arrowhead Pharmaceuticals Inc.'s cash conversion cycle fluctuated significantly over the past quarters.

In Q1 2024 and Q4 2023, Arrowhead Pharmaceuticals Inc. managed to achieve a cash conversion cycle of 0.00 days, indicating that the company was able to swiftly convert its investments into cash flow within the same operating cycle.

In Q3 2023, the cash conversion cycle increased to 1.78 days, suggesting a slight delay in converting investments into cash flow compared to the previous quarters.

The cash conversion cycle significantly deteriorated in Q2 2023, reaching 92.90 days, which could indicate potential issues with inventory management, sales collection, or payment terms with suppliers during that period.

Although Q1 2023 also showed an elevated cash conversion cycle of 51.89 days, the company managed to improve its efficiency in Q4 2022 with a cycle of 2.12 days, pointing to effective cash management.

Overall, Arrowhead Pharmaceuticals Inc. should focus on enhancing its cash conversion cycle to ensure efficient utilization of resources and improve cash flow generation in future quarters.